Correlation Between Falcon Power and Auden Techno

Can any of the company-specific risk be diversified away by investing in both Falcon Power and Auden Techno at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Falcon Power and Auden Techno into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Power Co and Auden Techno, you can compare the effects of market volatilities on Falcon Power and Auden Techno and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Falcon Power with a short position of Auden Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Auden Techno.

Diversification Opportunities for Falcon Power and Auden Techno

0.53

Correlation Coefficient

Falcon Power  Auden Techno

Very weak diversification

The 3 months correlation between Falcon and Auden is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and Auden Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auden Techno and Falcon Power is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Falcon Power Co are associated (or correlated) with Auden Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auden Techno has no effect on the direction of Falcon Power i.e., Falcon Power and Auden Techno go up and down completely randomly.

Pair Corralation between Falcon Power and Auden Techno

Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the Auden Techno. But the stock apears to be less risky and, when comparing its historical volatility, Falcon Power Co is 1.25 times less risky than Auden Techno. The stock trades about -0.04 of its potential returns per unit of risk. The Auden Techno is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11,300  in Auden Techno on December 5, 2024 and sell it today you would earn a total of  150.00  from holding Auden Techno or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Falcon Power Co  vs.  Auden Techno

Falcon Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Falcon Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Auden Techno

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auden Techno are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Auden Techno is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Falcon Power and Auden Techno

The main advantage of trading using opposite Falcon Power and Auden Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, Auden Techno can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Auden Techno will offset losses from the drop in Auden Techno's long position.

The idea behind Falcon Power Co and Auden Techno pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.